Agenda item

The Housing Revenue Account (HRA) is a separate account within the Council that ring-fences the income and expenditure associated with BCP Council’s housing stock. The HRA does not therefore directly impact on the Council’s wider General Fund budget or on the level of council tax. Income to the HRA is primarily received through the rents and other charges paid by tenants and leaseholders.

Poole Housing Partnership continues to manage the Poole Neighbourhood stock on behalf of BCP Council while the stock in the Bournemouth Neighbourhood is directly managed. Although there can only one HRA, BCP Council maintains two separate accounts for each neighbourhood within it.

This report seeks approval for the proposed budget for the HRA for 2020/21 and the key principles on which it is based.

This report sets out the proposals regarding the rents, service charges and other charges to tenants as well as the expenditure plans for the 2020/21 rent year. These proposals and the actions within the delivery plans for each neighbourhood all support the priorities set out in the Council’s new Corporate Strategy.

The Portfolio Holder for Housing presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'D' to these Minutes in the Minute Book.

Cabinet approval and recommendation was sought for the proposed budget for the HRA for 2020/21 and the key principles on which it based.

Cabinet were informed that the report set out the proposals regarding the rents, service charges and other charges to tenants as well as the expenditure plans for the 2020/21 rent year. These proposals and the actions within the delivery plans for each neighbourhood all support the priorities set out in the Council’s new Corporate Strategy.

The Chairman of the Overview and Scrutiny Board outlined concerns raised by the Overview and Scrutiny Board regarding the recommendation ‘2x’ relating to the £2 million to be contributed from the HRA towards BCP Council’s transformation programme and the benefit that this would bring for residents. The Portfolio Holder advised that the HRA was not a separate fund but a ring-fenced account of certain defined transactions, relating to local authority housing, within the Councils General Fund. The HRA was governed by a statute as to what could be charged to and credited against the account. Including proportionate costs of a corporate nature borne by the Council.

RECOMMENDED that Cabinet recommends that Full Council approves the following:-

1.      The set of key principles proposed for the HRA operating in both Bournemouth and Poole neighbourhoods for 2020/21 be approved as follows:-

(i)        Deliver strong financial management of the HRA which maximises the ability to collect income, gain efficiencies and service outstanding debt

(ii)      Ensure HRA stock is adequately and efficiently maintained particularly in relation to the Council’s legal obligation to ensure the health, safety and welfare of its tenants

(iii)     Focus on the delivery of effective housing management services to support successful tenancies and strong and sustainable communities 

(iv)     Continue to secure funding opportunities to deliver additional social rented and affordable housing through new build and acquisitions

These principles, and the actions that will be linked to them in the Delivery Plans, support the newly agreed themes within the Council’s Corporate Strategy.

Note that these objectives are broadly stated in order of priority. As a landlord, it is important that debt is serviced in the first instance, followed by ensuring the effective and efficient maintenance and management of the properties and support for tenants. Subsequent surpluses and borrowing will then be maximised to bring forward additional affordable housing.

2.     That revenue budgets for 2020/21 and provisionally for 2021/22 and 2022/23 are set using the following principles: -

(i)        That dwelling rents are increased by 2.7 per cent (CPI for September 2019 + 1 per cent) in line with the Ministry of Housing, Communities and Local Government (MHCLG) Policy statement on rents for social housing published in February 2019.  

(ii)      That garage rental charges are increased by RPI which for September 2019 was 2.4 per cent across both the Bournemouth and Poole neighbourhoods.

(iii)     That leasehold services are charged to leaseholders in line with actual costs incurred.

(iv)     That the following tenant service charges are budgeted for based on an increase of 2.4 per cent:

·          Scooter charges (both neighbourhoods)

·          Laundry (Bournemouth neighbourhood)

·          Window cleaning (Bournemouth neighbourhood).

And that a 2 per cent increase is applied to caretaker charges and a 3 per cent decrease for utility charges in the Poole neighbourhood.

(v)      That service charges within the Bournemouth neighbourhood for communal gardening and cleaning will be adjusted based on the cost of providing the service. The previously approved tenant service charge policy will continue to be rolled out with communal electricity charges applied from 1 April 2020.

(vi)     That the PHP management fee paid from the HRA is increased by £203,000 to reflect pay award and employer contribution pension increases and new annual IT licencing costs.

(vii)   That the bad debt provision is held at 2019/20 levels for both neighbourhoods - £188,000 for the Bournemouth neighbourhood and £197,000 for the Poole neighbourhood.

(viii)  That the depreciation budget for the Bournemouth neighbourhood is decreased by £65,000 and by £21,000 for the Poole neighbourhood.

(ix)     That HRA reserves should be maintained at a minimum level of 5 per cent of total expenditure. This equates to £1.103 million for the Bournemouth neighbourhood and £803,000 for the Poole neighbourhood for 2020/21, totalling £1.906 million.

(x)      That a one-off contribution of £1 million from each neighbourhood HRA to the General Fund is proposed in support of the overall cost of BCP Council’s transformation programme to implement organisational change on the proviso that the HRA also benefits from the savings that are made because of the programme. 

3.      That capital budgets for 2020/21 and provisionally for 2021/22 and 2022/23 are set using the following principles: -

(i)        That funding totalling£4.3 million is carried forward from the 2019/20 Bournemouth neighbourhood capital programme and that funding totalling £5.659 million is carried forward from the 2019/20 Poole neighbourhood capital programme, to more accurately reflect cash flow of agreed projects between financial years.

(ii)      That the planned maintenance programmes as set out in Appendix E to the associated report are agreed.

(iii)     That the major projects plan as set out in paragraphs 81 to 94 and Appendix F to the associated report is agreed.

(iv)     That the development of Luckham Road/Charminster Close and the determination of the final funding arrangements delegated to the s151 Officer in consultation with the Cabinet Holders for Housing and Finance are agreed.

(v)      That final approval is provided for the development of temporary accommodation at Herbert Avenue to progress through to completion in line with the approved Business Case.

4.     That the Delivery Plans for each neighbourhood to support the key principles for the HRA and the Council’s new Corporate Strategy are agreed as set out in appendices G and H to the associated report.

5.     That further work is supported regarding the financial remodelling of the HRA and its two neighbourhood accounts to: -

(i)        Agree a Housing Development Strategy for new build activity to consolidate the way forward on issues such as the delivery of social rented homes and the achievement of sustainable new build housing with these being brought forward during 2020.

(ii)      Review options for current stock and a refresh of the Asset Management Strategy to assess opportunities for delivering higher standards of sustainability for all existing homes.

Voting: Unanimous

Portfolio Holder: Housing